What is the Bailout Fund?

It seems rather complex, and I'm having a problem wrapping my head around the finer points, so I started with a principle that has never failed me, that it is a Bush initiative, so it will be a failure.

I am drawing on what is to my mind the single wisest thing written thus far this millenia, by one Daniel daves, this is a truism about the Bush and His Evil Minions^™:

But it does inspire in me the desire for a competition; can anyone, particularly the rather more Bush-friendly recent arrivals to the board, give me one single example of something with the following three characteristics:

1. It is a policy initiative of the current Bush administration
2. It was significant enough in scale that I'd have heard of it (at a pinch, that I should have heard of it)
3. It wasn't in some important way completely fucked up during the execution.

So I start from the assumption that it's screwed up. Then I looked at what was going on with this fund, and it appeared that banks were investing in their own brokerage funds, which is generally not allowed in the US, and was a primary cause of Japan's financial crisis that ran over a decade, and I am even more convinced that this will be ineffective at best, and harmful at worst.

Then I asked myself the question that Nouriel Roubini, has been asking, "Is this this a liquidity crisis, or an insolvency crisis?" I.E. Is the problem that the money has stopped moving because of fear, and when things get back to normal, everything will be fine, or is the underlying value of the assets in these funds far less than previously reckoned?

Obviously, if it is the former, it's a matter of reassuring markets with some sort of capitalist WD-40, but if it is the latter, then these funds, and some of the companies, will go bust no matter what is done, and any bailout scheme is simply an attempt to pass the losses off on unsuspecting rubes.

I lean toward the the latter, particularly since there is SIGNIFICANT federal support of the plan, because the Treasury department had to waive significant regulations regarding cross-ownership to allow this plan to come into being.

Then I read Dr. Roubini's analysis on the bailout fund, "Super-Conduit or Super-Bailout Shell Game?", (warning: it's a bit dense), and he seems to agree: this is about attempting to pass the losses downstream.